Would it be better to buy a single family home or condo?

Asked by Rudy, Nipomo, CA Tue Apr 3, 2012

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Lance King, Agent, San Francisco, CA
Tue Apr 3, 2012

I respectfully disagree that you should avoid condos without knowing anything more about your finances, age, and lifestyle.

Typically speaking, single family homes appreciate and/or hold their value better than condos, but by design that also means they will cost more starting out. And the only time our clients ever have issues getting loans for condos is if it's an FHA loan or there are a lot of rentals in the building.

Also keep in mind that while a single family home doesn't have HOA dues, you are going to spend money every month on homeowner's insurance, water, and garbage - all things generally covered in your HOA dues - plus ALL maintenance is on you to take care of. That means if the home is older your monthly expenses could be much higher. And maintenance aside, you'll probably spend close to that $250 per month on the basics above.

If it isn't about money, in the end you may prefer a condo if you are older and don't want to deal with maintenance or are someone who travels a lot. Plus smaller condo buildings have a much different feel than larger ones. If you like playing handyman and/or have a family, if you can afford it you'll probably prefer a single family home. And of course the big one, with a sf home you don't have to answer to others.

We don't work in your area, but I would find a knowledgeable, experienced broker/agent to discuss your finances, goals, and lifestyle. They will help you figure out what's best.

Best Regards,

Lance King/Owner-Managing Broker
DRE# 01384425
1 vote
Excellent post
Flag Wed Apr 4, 2012
My NC Homes…, Agent, Chapel Hill, NC
Wed Apr 4, 2012
Each has it's pros and cons and there's no right answer to the question. Condos come with regulations and put you in very close proxmity to your neighbors which depending on how you feel can be a good or bad thing. Condos or town-homes often offer nice amenities that a single family home isn't likely to, pools, tennis, gyms etc. There less exterior maintenance to be concerned about. The trade off is monthly fees and an HOA with rules that you may or may not like. What's critical before buying a condo or townhome is that you get a full set of the Bylaws and read through them carefully to see if you'd be comfortable honoring these rule. You also want to see a copy of the associations financial report to make certain you aren't buying into an under capitalized (or worse broke) association. Finally you'll want to find out if the development is FHA approved and what the percentage of owner occupants is. Condominium financing can be difficult otherwise. (Note Townhomes don't tend to have this problem)

Single family homes offer more space and often more privacy as well as fewer rules and regulations (unless their part of a HOA in which case they could have as many as any condo) and no monthly fees, however you've got to factor in that you're responsible for all the maintenance of the house and property.

Depending on where you are in life at this time and how you see yourself living as you consider the future will help you determine which will be best for you.

Good Luck!
0 votes
Seth Captain, Agent, Chicago, IL
Tue Apr 3, 2012
If you value freedom of choice, thought, and independence, go with the single family.

If you value excessive regulations and see how totalitarianism might be beneficial to working middle class adults, go with the condo.
0 votes
Robert Chome…, , San Diego, CA
Tue Apr 3, 2012
Pro's and cons - I have a major opinion on this!

**Condo Pros:**
+you can often get a better *location* than a SFR for a lot lower price (you can live in area with million dollar homes for a fraction of the price in a condo, close to best schools, restaurants, beaches...where with a SFR you may have a long commute to those thins)
+condo prices are so much lower right now than SFR's even WITH hoa the payment is still far lower
+yes you have hoa dues, BUT you have a lower home insurance policy than a house, water is included in hoa dues, and far less maintenance costs (no roof, no exterior painting etc..., no landscaping)
+condos are easier to lock and leave if you travel a lot (no landscaping, etc..)
+condos can be safer especially if on 2nd floors and above and are behind locked gates (SFR's are exposed to the street and window are accessible for break-ins_
+condo prices are much more depressed right now than SFR's - so you can get better deals
+condos have less fix up work if you buy a fixer upper... usually just interior cosmetic

***Condo Cons***
-Hoa dues can rise over time and you can get special assements (but you get special assesments too on SFR's...they just don't call them that...they call them "oh honey we have to replace the roof now b/c of that leak, etc.."
-condos don't appreciate as fast as SFR's
-you have less space and it can feel cramped - where with a SFR you are on your own private lot with lots of space
-financing can be tough on condos due to owner occupancy %, etc... things out of your control
-hoa boards can be very dysfunctional and your goals may not align with other owners
-you can remodel the exterior whenever you want

.....over all I'm a contrarian and PRO condos right now (where most do not recommend them). I just think you can get killer deals and killer locations right now in the really cool places to live that you cannot get on SFR's.
0 votes
David Norwood, Agent, ARROYO GRANDE, CA
Tue Apr 3, 2012
Hi Rudy-yesterday I wrote a response to you about a similar question you wrote on Tulia which you may find useful. http://www.trulia.com/voices/Home_Buying/I_would_like_to_buy…

In short, due to the cost of the association (HOA) fee it may be more affordable to purchase a single family home compared to a condo.

Another issue you should be aware of it if the condo development is over 51% non-owner occupied (renters), you CANNOT get a loan. This may not be an issue when you buy the condo, but if investors buy up several units to rent, you will not be able to sell the home in the future unless the new buyer pays cash. This issue often drives the value of the condos down significantly.

Give me a call at 805-471-0828 to discuss your options. My office is 9 minutes from Nipomo, so I would be happy to show you any of the available homes or condos that you like. David Norwood – david@dnorwood.com
Web Reference:  http://dnorwood.com
0 votes
Catherine St…, Agent, Cayucos, CA
Tue Apr 3, 2012
It depends on many facts as all of the agents have explained. Also
Important is what you want as well as what are your reasons for your purchase. For example; do you intend to make it your primary residence or rent it out?
Are you considering a purchase based on purchase price.
Not a quick answer to your question.
Have a realtor consultation in person.
Web Reference:  http://csreproperties.com
0 votes
Laura Coffey, Agent, Santa Clarita, CA
Tue Apr 3, 2012
Rule of thumb is detached homes resale better but that also depends on location. Two areas in Santa Clarita the town-homes go for more than a lot of the houses in other nice areas just because they are in the best areas.
If there is an area you like but can only afford a town-home go for it!
Web Reference:  http://www.laura4homes.com
0 votes
, ,
Tue Apr 3, 2012
Hi Rudy,

I would stay away from a condo, they're difficult to get financing on which presents problems for you when you buy and sell. Think about it this way. If it's a pain to get financing for you to buy it, what does that mean for you if/when you decide to sell? Less potential buyers.

Derek brought up another good point. The HOA dues. That's money that can be used towards your purchase price instead of going to the HOA.

Let's say the HOA dues are $250.00 per month, that would equate to an extra $53,000 towards your purchase price on a 30 year fixed rate loan at 3.75%. In other words, it increases your purchasing power.

One more thing to consider. Nipomo is one of the areas that is eligible for a no money down USDA mortgage. The other great thing about this option is the monthly mortgage insurance (MI) is substantially less than an FHA or conventional loan. For example: On a $300,000 loan, the monthly MI on an FHA loan is going to be $300 but on a no money down USDA loan it's only $75.00.
0 votes
Michael Byrd, Agent, Arroyo Grande, CA
Tue Apr 3, 2012
Derek summarized the issues pretty succinctly. Ask yourself one simple question: Why do I want a condo? If you have good reasons for preferring a condo, focus on that. If your needs would be satisfied by either a condo or a single family home (or a PUD which is sort of a hybrid between the two) then focus on everything.

There are a few other considerations you should take into account. Condos tend to lag somewhat behind SFRs in appreciation. Since most condos in our market are two-story models at time of resale you would have a smaller buyer pool as aging boomers and the elderly are wary of buying homes with stairs. On the flip side, in the lower price ranges you can often get a newer home in better condition than you are apt to find in the SFR home pool. And some condo developments have common facilities such a pools which might fit your lifestyle.

The best advice I can give is to take a piece of paper and divide it into three columns labeled "things I must have," "things I'd like to have," and "things I don't care about." Use what you've organized on that paper to evaluate every prospective home you consider. That will keep you focused on your end-game and help you to better evaluate and make good decisions.
0 votes
Derek Kamm, Agent, Honolulu, HI
Tue Apr 3, 2012
it depends... your long-term and short-term goals play into what's best for you. I suppose the simplest answer would be, "buy anything right now." Perhaps Google what Warren Buffet suggested his secretary do, that will shed some light on the subject for you. Rudy, you should also consider how much home you can buy for that maint. cost. For example, ask your lender what the equivalent of let's say $500 a month is in mortgage-amount terms...if your interest rate is anything around 4%, that's a lot of house...
0 votes
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